01—Abstract
Summary
Summary of the 8-K filed January 8, 2024. Cited figures are marked; the original filing is the authoritative source.
WEC Energy Group, Inc. disclosed in this Form 8-K, filed January 8, 2024, that the Illinois Commerce Commission (ICC) issued written orders on November 16, 2023 in the rate reviews of its utility subsidiaries The Peoples Gas Light and Coke Company (PGL) and North Shore Gas Company (NSG).
The ICC disallowed $236.2 milliona of capital costs related to the construction and improvement of PGL's service centers, which includes $177.2 million of costs previously incurred by PGL, with the remainder being expected future spend. The ICC also disallowed $1.7 million of capital costs related to NSG's construction of a gas infrastructure project. On January 3, 2024, the ICC granted a limited-scope rehearing, but the capital cost disallowances will not be part of it.
As a result, WEC will record a $178.9 millionb pre-tax ($129.8 million after tax), or $0.41 per share, non-cash charge to 2023 earnings, and it anticipates appealing the disallowance to Illinois circuit court. The charge lowers WEC's 2023 GAAP earnings guidance to $4.17 to $4.21 per share. Excluding the charge, adjusted (non-GAAP) guidance is $4.58 to $4.62 per share, with management expecting results at the upper end of that range.
WEC stated that it will provide 2024 earnings guidance and a revised capital plan during its year-end 2023 earnings call, scheduled for February 1, 2024. The filing also incorporates the charge disclosure into Item 2.06 (Material Impairments).
02—Key points
Key Highlights
- ICC disallowed $236.2 million of PGL service center capital costs, including $177.2 million previously incurred, and $1.7 million of NSG gas infrastructure project costs.
- WEC will take a $178.9 million pre-tax ($129.8 million after tax, or $0.41 per share) non-cash charge to 2023 earnings.
- GAAP 2023 earnings guidance is now $4.17 to $4.21 per share; adjusted (non-GAAP) guidance excluding the charge is $4.58 to $4.62 per share.
- Management expects 2023 results at the upper end of the adjusted guidance range.
- WEC plans to appeal the disallowance to Illinois circuit court.
- The ICC granted a limited-scope rehearing on January 3, 2024, which will not cover the capital cost disallowances.
- 2024 earnings guidance and a revised capital plan will be presented on the year-end 2023 earnings call, scheduled for February 1, 2024.
03—Questions
Frequently Asked Questions
What caused the $178.9 million charge?
The ICC's November 16, 2023 rate review orders disallowed $236.2 million of PGL service center capital costs and $1.7 million of NSG gas infrastructure project costs. WEC determined that the portion previously incurred must be expensed, resulting in a $178.9 million pre-tax non-cash charge.
How does the charge affect WEC's 2023 earnings guidance?
GAAP earnings guidance for 2023 is now $4.17 to $4.21 per share. Excluding the $0.41 per share charge, adjusted (non-GAAP) guidance is $4.58 to $4.62 per share, with management expecting to reach the upper end of that range.
Will WEC challenge the ICC's decision?
Yes. WEC anticipates appealing the disallowance of these capital costs to Illinois circuit court. The ICC's January 3, 2024 rehearing grant is limited in scope and does not include the capital cost disallowances.
When will WEC provide 2024 guidance and an updated capital plan?
WEC plans to provide 2024 earnings guidance and its revised capital plan during its year-end 2023 earnings call, currently scheduled for February 1, 2024.
04—Continue